Expats warned of illegal home crackdown in Thailand

Foreigners illegally owning property may be deported under new rules.

Many expats have settled in Thailand, but they must be careful not to infringe its strict laws on land ownershipPhoto: Dave stamboulis / Alamy

By Joanne Christie

9:39AM BST 20 Jul 2012

Expats who own land illegally in Thailand could be deported under tough new laws being drafted by the government.

Thai ombudsman Siracha Charoenpanij said earlier this month that he was drawing up "carrot-and-stick" legislation to protect the country from illegal foreign nominee ownership.

Under Thai laws, foreign nationals are not allowed to own residential land. They can, however, buy apartments so long as no more than 49 per cent of a development is owned by foreigners. They can also purchase detached villas, but while they can own the house, they cannot own the land the house is on and are only able to lease it for 30 years at a time.

To get around these restrictions, some have entered into complicated structures whereby a company is set up to purchase the land. A Thai national holds the majority of shares in that company, but in reality may have no financial interest in the company and may own it on behalf of the foreign buyer.

It is these such "nominee ownership" arrangements that the government now wants to crack down on, and Charoenpanij has also proposed a reward – of 20 per cent of the land’s value when sold – for those providing information about illegal ownership. His plans also include penalties for lawyers or consultants who advise foreign buyers on nominee structures.

Richard Pentreath, owner of Accent Overseas, a property firm focused on Thailand, said removing loopholes would be good for foreign buyers. “The changes would mean people could no longer be cheated out of their money. Some lawyers advise people to use such structures but then further down the line when somebody dies it turns out they don’t own anything at all.

"People don’t need to set up companies, they don’t need to do anything complicated at all. They should just stick by the letter of the law.”

But there is some confusion about the definition of a nominee structure, according to Marcus Collins, head of the regional property practice at law firm DFDL in Thailand. “Clearly there are many nominee structures that are not legal — where a friend or a driver or individual lawyer who has no financial investment in a property holds shares to basically allow a foreigner to own a property.

"But there are other arrangements where Thai individuals or Thai companies have invested money in shares and get a fixed return on those shares and at least have some economic interest in a structure. Maybe that is a nominee structure, maybe it is not.

"We would welcome clarification of what nominee really means and what is and isn’t legal, and hopefully that is something that will happen once this issue is brought to the attention of parliament.”

The ombudsman plans to submit the draft to Thailand's parliament later this year.